haku: @author Schmitt, A. / yhteensä: 2
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| Tekijä: | Schmitt, A. Spaeter, S. |
| Otsikko: | Improving the prevention of environmental risks with convertible bonds |
| Lehti: | Journal of Environmental Economics and Management
2005 : NOV, VOL. 50:3, p. 637-657 |
| Asiasana: | convertible bonds environment liability |
| Kieli: | eng |
| Tiivistelmä: | This article considers a limited liability firm that needs external funds in order to invest in an activity that presents an envrironmental risk for the society. When the firm's risk-reducing activities cannot be observed by the lenders, the authors suggest that the issue of converible bonds can create incentives to improve prevention. Convertible bonds allow the holder to exchange his bonds for a fixed number of the firm's shares. The use of such hybrid securities couls either complement or be an alternative to the American CERCLA legislation about lender extended liability. The authors define an optimal convertible bond contract that induces unchanged economic profits for the bank, more prevention and higher expected net revenues for the firm and a higher expected social welfare than with standard debt. |
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